Ikonomakis & Ikonomakis v Boral Building Services No. DCCIV-98-1438 Judgment No. D63

IKONOMAKIS & IKONOMAKIS v. BORAL BUILDING
SERVICES PTY. LTD.
[1999] SADC 63

Judge Burnett

Civil

This is an appeal against an order of the Acting Master made on 3rd February, 1999. Reasons for the order were posted to the parties on 3rd February, 1999 and supplementary reasons (which related to the question of costs) were posted on 16th February, 1999. I will not deal with the costs aspect of things at this stage. It is better to leave the costs question aside until the more substantive issues are resolved. Those issues are addressed in the earlier of the two reasons for decision.
The Appellant is WorkCover Corporation which is not a party to the original proceedings. The order complained of is an order for non party discovery and production of documents.
The application which led to the order complained of was brought by the Defendant against WorkCover and, beyond an indication that they wished to be heard on the costs issue, the Plaintiffs have not taken any part in this appeal.
The appeal is brought pursuant to section 43(2)(a) of the District Court Act as supplemented by DCR 97. I observe in passing that R97.01 provides that an appeal is “by way of rehearing” and “in matters involving the exercise of a discretion, the Judge may exercise his own discretion”. I emphasise the word “may” in order to also emphasise that there is no reference to “must”. I may, if it is proper, exercise the discretion afresh, I am not obliged so to do.
It will be useful if I set forth at this stage the actual order complained of:-

“The Court orders:
1...... That WorkCover Corporation of 100 Waymouth Street, Adelaide SA 5000 by its proper officer disclose to Ward & Partners, solicitors for the defendant, within 14 days of service of this order upon it the following documents:
1.1... Claims Case Notes insofar as they relate to conversations with the plaintiff, medical providers, and rehabilitation officers as to the progress of the claim;
1.2... Claims Case Notes disclosing the nature and contents of surveillance reports or video;
1.3... Investigative reports and statements contained within the Recovery file of WorkCover Corporation;
1.4... Any video or other film in the possession, custody or power of WorkCover Corporation.

2...... That WorkCover Corporation preserve such documents until judgment in this action or until further order.
3...... That WorkCover Corporation provide to the solicitors for the defendant upon request, photocopies or duplicate copies as the case may be of such documents.
4...... That the defendant pay to WorkCover Corporation its reasonable costs or charges incurred in such provision or as a consequence of complying with this order.
5...... That the costs of and incidental to the application and this order be the defendant’s costs in the cause.
6...... That the parties and WorkCover Corporation may have liberty to apply.
FIT for counsel ”

The appeal is not pressed against the order in its entirety but rather is limited to those aspects of the order that deal with what Mr. Crawley (for the Appellant) calls “a recovery file, surveillance reports, videos and associated documents” and costs. Of course, there may be documents within other files and papers included in the order which relate to those categories. I would be surprised if there were not, and the Appellant also complains at the requirement to discover and produce those papers.
In other circumstances, I might well indicate at this stage which of the orders are complained of and which are not. However, not having perused the material myself and, on the view that I take of the appeal, seeing no need to do so, I will go on to treat the appeal as relating to the order as a whole (save for costs) and I will resolve the matter in that way.
I will complete the preliminary stages of these reasons by referring to a matter raised by Mr. Crawley in the course of his reply. Mr. Crawley sought to gain some comfort from the suggestion that the Acting Master had, in some way, accepted the Appellant’s classification of documents by suggested function of WorkCover and that, in consequence, there was some sort of tacit acceptance of an aspect of the Appellant’s case. I do not agree. A careful perusal of the first reasons delivered show that the Acting Master well understood the various functions, duties and roles of WorkCover and the methods that would have needed to be applied by WorkCover to perform those obligations. I think that he chose to refer to the grouping of the documents as a matter of convenience - he had to call the documents something. I see no more significance in the verbiage used by the Acting Master than that. He accepted Workcover’s characterisation of documents etc. as a convenient description - nothing more.
The various roles, obligations and duties of WorkCover are plain. They are to be seen in the legislation establishing the Corporation and the other Statutes that vest it with powers and obligations. In addition, a number of cases describe the place of WorkCover in the order of things (for a good example see Robbins v. Harbord 62 S.A.S.R. 229). It does not matter, in this case, whether any function of WorkCover’s divers roles and duties were “outsourced” or not. WorkCover is not always an ordinary litigant - although it can be in some circumstances. Often enough in litigation it will be a statutory decision maker discharging its statutory functions. In the Harbord case (supra) King C.J. said at pages 236-237:-

“The provisions for reviews and appeals are contained in Pt VI, Div VI. The Corporation or the exempt employer, as the case may be, is necessarily a party to a review or appeal. A consideration of the provisions to which I have referred above, however, makes clear that they are not ordinary parties to litigation. The decision by the Corporation or exempt employer in relation to a claim is not simply a decision by a private person or corporation against whom a claim is made whether or not to admit or deny liability. It is a decision made in pursuance of a statutory function. The function of the exempt employer is not distinguished from that of the Corporation. Both have the statutory function of investigating and determining claims for compensation. Neither is entitled in determining claims simply to consult its own interests. There must be proper grounds of rejection of a claim and they must be notified to the claimant. It follows, in my opinion, that the Corporation or exempt employer are not parties to a review or appeal in the ordinary role of litigant but as primary decision makers defending their primary decision against a person affected by the decision (s 95).
The date or dates of the filming are unknown. There can be no doubt, however, that its purpose was either to provide material to assist in the defendant’s function of making the primary decision on the plaintiff’s claim, or to provide material to support that decision before the Review Officer. Its purpose was not use by a litigant in the course of litigation, but use by a statutory decision-maker in discharging its statutory function. I do not think that that purpose attracts legal professional privilege.
This conclusion is reinforced by the provisions of s 96(1a) which are as follows:
‘A party to proceedings before a Review Officer must disclose to the Review Officer and all other parties to the proceedings the existence of all material in the party’s possession or power that may be relevant to the proceedings and must, if the Review Officer so requests, produce all or any of that material to the Review Officer.’

This subsection envisages that all relevant material in the possession of the Corporation or the exempt employer will be disclosed and, if requested, produced, to the Review Officer. Most, if not all, of that material would in the typical case be protected by privilege if the Corporation or exempt employer were an ordinary litigant. It cannot be intended that they could withhold statements of witnesses and other material gathered in the course of an investigation leading to determination of a claim. Such an interpretation would largely defeat the purpose of the subsection. It is implicit in the subsection that legal professional privilege is not to apply to material relevant to the proceedings.
I am of opinion therefore that legal professional privilege does not apply to the video film or investigator’s report and that they must be produced to the Review Officer, if requested.”

I think that the most important aspect of this appeal is the question as to whether, in the light of Harbord (and other decisions such as WorkCover v. Saunders and Bawden - decision of the Full Court dated 21st December, 1995 - judgment of Williams J. with whom Cox and Perry JJ. agreed), the order of the Acting Master dealt with documents which were proved to be the subject of privilege vested in WorkCover.
The genesis of this appeal is an accident in the work-place which occurred in October, 1995. In that accident, the male Plaintiff is alleged to have suffered injury whilst in the employ of Lazer Constructions Pty. Ltd. It is alleged, though, that the injury was caused by a defective hoist which was hired by Lazer from the Defendant. As the injury was said to have occurred in the course of the first Plaintiff’s employment, WorkCover became involved and made payments of income maintenance, medical and related expenses. The payments made are substantial.
Over the years since the accident, WorkCover has exercised its rights pursuant to law to investigate the accident and have the male Plaintiff examined medically. In May, 1998, WorkCover gave notice to the Defendant of its intention to recover payments made to the male Plaintiff pursuant to section 54(7) of the Workers Rehabilitation and Compensation Act, 1986. It is in that context that these proceedings became central to the chain of events and the appeal.
I add that, in October, 1998, WorkCover issued proceedings against the Defendant in the Workers Compensation Tribunal seeking recovery of payments made to the male Plaintiff. The sum involved is about $140,000 plus an unstated amount for future payments.
So it is that WorkCover has the same interest in this action as the male Plaintiff, namely, that he should succeed and receive the best award possible in accordance with the evidence and the law. However, their interests may not accord on other occasions both relating to this and possibly other matters.
In these circumstances, the Defendant maintained that WorkCover had in its possession or power, and that of its solicitors, documents relating to this case and the male Plaintiff. Obviously, and correctly, the Defendant referred to medical reports and records, statements, investigative reports, including video material, and so on. The Defendant sought discovery and inspection of that material and, after hearing argument, consideration and the provision of careful reasons for decision, the Acting Master made the orders, some of which are complained of.
Put in the most basic way, should WorkCover succeed in this appeal, it will have things “each way”. It will withhold from the Defendant material that might well assist the Defendant in its case both as to liability and quantum. Thus it might well maximise its own prospects of recovery. It will also have intact and private the material under discussion to be used to WorkCover’s advantage should it be needed in the future. If the law permits that state of affairs, then the appeal must succeed.
The argument mounted by the Appellant depends heavily upon the acceptance of a clear definition of the various aspects of WorkCover’s functions and duties. Sharp distinction is sought to be made between what is called the “claims management function”, the “fraud investigation function” and the “recovery function”. The first and third of the so-called functions are now “outsourced”, but, as I have said, that makes no difference in this case.
WorkCover maintains that it accepts the decision in Harbord (supra). It agrees that the video surveillance material and documentation relating to it is governed by Harbord and therefore is not the subject of legal privilege. However, it goes on to contend that the order complained of denies the Appellant procedural fairness, a point not specifically addressed in Harbord.
Mr. Crawley outlined at some length the purpose to which the material might be put in future disputes between WorkCover and the male Plaintiff (should there be any). He emphasised the value to WorkCover of the element of surprise in litigation and the possible impact of loss of surprise should discovery take place now and the material be used in this case. Mr. Crawley pointed out that WorkCover had gathered the surveillance and related material together at no small cost and now stood to lose the real value of its work.
This being a matter of the exercise of discretion, I am asked to exercise my discretion afresh and in the opposite way to that decided upon by the Acting Master. In support of this submission, Mr. Crawley relied upon a decision of Debelle J. in B.H.P. v. Mason 67 S.A.S.R. 456.
I do not pause to discuss the facts of that case in any detail. It concerned a dispute between an exempt employer (B.H.P.) and a worker. There were review proceedings on foot over the worker’s claims and, in the course of those proceedings, a Review Officer made orders requiring B.H.P. to disclose and produce to the worker’s solicitors, video surveillance film that had been taken of the worker. The order meant that the worker would have had access to the video before he gave evidence. Not surprisingly, Debelle J. (on an application for Judicial Review) held that the orders were in breach of procedural fairness. His Honour took the view that, whilst the video had to be produced to the worker at some stage, it should not be produced before the worker’s cross-examination.
B.H.P. v. Mason is clearly distinguishable from the case at bar. There is a very great difference as to production of such material as between Defendant and Plaintiff and production between a non party and the Defendant.
I believe that I have grasped Mr. Crawley’s arguments about procedural fairness but I cannot accept them. Should the Defendant use WorkCover’s material in this case in a way that is advantageous to the Defendant’s interests, then surely the result should assist WorkCover in any future dealings with the male Plaintiff. Should the Defendant decide not to use the material in this action, then no harm at all can be done to WorkCover’s other interests.
For these reasons, and those given by the Acting Master, I decline to exercise my discretion in a different manner to that adopted by the Acting Master with respect to the material described above.
The second leg of the Appellant’s argument is directed at a group of documents called collectively “the recovery file”. This is the most significant point in the appeal. WorkCover has two methods available to protect its financial interests in a case like this. It can give a notice of charge in proceedings between the worker and the alleged tort-feasor or it can commence its own claim against the Defendant in the Supreme or District Court or the Workers Compensation Tribunal. Here, WorkCover has availed itself of both potential remedies.
The argument is that, in its recovery function, WorkCover is simply another litigant pursuing its legal remedies and is, therefore, entitled to legal privilege in respect of “the recovery file”. It is contended that the Harbord case does not apply to the case at bar. It is further argued that all the cases referred to by the Acting Master in his reasons referred to “claims management” and not “recovery issues”.
The effect of the Acting Master’s decision is, it is argued, that the Defendant in both the subject action and proceedings in the Workers Compensation Tribunal will have access to all WorkCover’s “preparation material” without having to discover the Defendant’s material. It is said that such a situation is unfair and offends the rules relating to professional privilege. I find it difficult to accept that proposition. Surely, WorkCover will have access to whatever material the Defendant uses at the trial of this action and surely WorkCover can seek discovery in the Tribunal proceedings.
To those observations I add my view that “the recovery file” argument does not pass the “sole purpose” test as laid down by the High Court in Grant v. Downs (1976) 135 C.L.R. 674. I believe that the nature of the test is stated correctly in Judge Lunn’s “Civil Procedure in South Australia” Vol. 1 page 9017. In that work, the learned author said of the “sole purpose” test: “Documents brought into existence for the sole purpose of use in pending or anticipated proceedings are privileged, but only if this was the sole purpose for the document...........The test relates to the actual purpose for which the document was brought into existence; if it was brought into existence solely for use in legal proceedings it is beside the point that it may subsequently have been capable of being used for other purposes”.
WorkCover seeks to press for a view that regards its functions as totally separate and distinct each from the other. It seeks to insist that there is some type of “Chinese Wall” between the functions which it performs. That simply offends common sense and, I believe, the views of the Supreme Court which (with respect) take a realistic view of what really must happen within WorkCover. Cases such as Harbord and Saunders (supra), I think, support my view.
Having said those things, I pass on to the point which I believe, even on its own, is quite fatal to this aspect of the appeal, namely, the obvious fact that those who assert privilege as a defence against discovery must prove what they assert. They must prove why it is that what is sought to be discovered is, in fact, privileged. The decision of Zelling J. in August Investments Pty. Ltd. v. Poseidon Ltd. (1971) 2 S.A.S.R. 60 and of Perry J., and subsequently the Full Court, in The District Council of Stirling v. Casley-Smith and Others (1988) 50 S.A.S.R. 297 support that proposition. I have perused the file carefully and I have considered the arguments carefully. Nowhere can I find anything that approaches proof of what WorkCover asserts in support of its claim of professional privilege. If there is a crucial distinction to be made between two functions of WorkCover in this appeal then, certainly, WorkCover has asserted, but not proved, it to my satisfaction.
I can find no error in the decisions reached by the Acting Master nor the reasoning by which he made his decisions. The appeal is dismissed except for the question of costs. I will hear counsel on that question of costs now.

[1999] SADC 63

14 May 1999